Canada: No Costs In LAT Proceeding, Despite Unreasonable Conduct From Counsel

A recent decision of the License Appeal Tribunal ("LAT") shows the difficulty for first party insurers to get costs awarded in accident benefits proceedings at the LAT. In 16-000546 v. Primmum Insurance Company, 2017 CanLII 46355 (ON LAT), the Tribunal considered the insurer's motion for costs following the dismissal of the applicant's claim. Rule 19.1 of the License Appeal Tribunal Rules of Practice and Procedures states that:

Following the motor vehicle accident, the claimant applied for and received benefits under the Statutory Accident Benefit Schedule – Effective after September 1, 2010. The applicant submitted a Treatment and Assessment Plan to the insurer and subsequently withdrew it 10 days later. The insurer did not deny the Treatment Plan. However, the applicant then appealed the non-payment of the withdrawn Treatment Plan to the Tribunal.

At the case conference, the applicant's counsel apparently requested that the Tribunal remove the applicant's withdrawn Treatment and Assessment Plan and add a new Treatment Plan to the proceeding. The insurer had provided partial payment on this new Treatment Plan, leaving a balance of $70.00 outstanding. However, there was no reference to this new Treatment Plan in the Tribunal's order for a written hearing following the case conference; the order clearly referenced the issue as whether the applicant was entitled to payment under the first (withdrawn) Treatment Plan.

Prior to the hearing, the applicant provided only one and a half pages of written submissions, with no corresponding evidence despite the submissions referring to exhibits that were not attached. Further, the submissions did not address the original Treatment Plan but instead addressed the outstanding $70.00 payment on the new Treatment Plan. Once it became apparent that the applicant had provided no evidence, the adjudicator solicited submissions from the parties regarding whether the applicant ought to be permitted to submit evidence after the submission deadline. The applicant did not provide any submissions on whether they should be permitted to provide evidence to support their case.

At each stage of the proceeding, the insurer provided submissions according to the deadlines and provided appropriate evidence. Accordingly, the adjudicator dismissed the applicant's claim due to lack of evidence. The insurer subsequently brought a motion for costs under Rule 19.1.

At the case conference, the applicant was represented by his counsel as well as a paralegal at his counsel's law office. It appears that at the time of the written hearing on the Treatment Plan, the paralegal in charge of the applicant's file was discharged from his counsel's law office. At the subsequent costs motion hearing, a second paralegal from his counsel's law office attended and candidly advised that any unreasonable conduct from the applicant, if it occurred, was caused by their law office and not the applicant.

In order to award costs, the adjudicator considered whether the applicant's conduct was unreasonable, frivolous, vexatious or in bad faith. The adjudicator determined that at the outset it was clear that they did not find that the applicant's conduct was frivolous, vexatious or in bad faith. The only question was whether the conduct was unreasonable.

Somewhat curiously, the adjudicator did not find that the applicant was unreasonable to dispute over the withdrawn Treatment Plan. The adjudicator stated that the applicant exercised their statutory right of appeal in good faith and stated that, while they or their counsel could have exercised their right in a more conscientious manner, it was not unreasonable for them to believe that the Treatment Plan was properly in dispute. The adjudicator stated that as a general rule, the Tribunal will be reluctant to punish applicants with a cost award for exercising their statutory right of appeal. The adjudicator further stated that on its own, it was not unreasonable for the applicant to provide his written hearing submissions without a corresponding evidentiary foundation, stating that the failure to do so was unfortunate and a mistake. The adjudicator stated that "mistakes [were] not always unreasonable".

The adjudicator determined that it was unreasonable that the applicant's counsel's failed to provide submissions on why they should have been permitted to provide evidence after the submission deadline, when they were asked to do so by the Tribunal. The applicant's counsel's law office defended this by arguing that the original paralegal on the file had been discharged and the files had been reassigned.

Ultimately the adjudicator declined to award costs, citing that Rule 19.1 sought to maintain civility and order during proceedings, to deter conduct that threatens the orderly and civil resolution of an application, and to ensure that the Tribunal's process and other participants are respected. Costs were not intended to compensate parties for the cost of bringing or defending claims, or to punish a party.

Further, the adjudicator stated that, despite the fact that an applicant and counsel are generally considered one party in proceedings, the adjudicator viewed this case as having "exceptional facts" that required a distinction between the them. Specifically, the adjudicator found that while the applicant did not display unreasonable conduct, whereas the applicant's counsel did. Given that Rule 19.1 only allows for costs against parties and the applicant's counsel was not a party to the proceeding, the adjudicator declined to award costs against the applicant personally.

This case is an example of the very high bar that successful parties must clear in order to be awarded costs at LAT proceedings. Further, it appears to allow adjudicators to distinguish between an applicant's conduct and their counsel's conduct in a proceeding when considering costs. For the time being, it seems that costs recovery will only be successful in exceptional circumstances.

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